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More than 13 million Americans work from home, according to the most current U.S. Census data, and the prevailing prediction is that the trend will continue.

Home Office Renovation Considerations

Around the world, the coronavirus pandemic has prompted people to view their homes with a different set of priorities. A dedicated home office has jumped to the top of many renovation and home-buying wish lists.

 

How business is conducted has changed, possibly permanently. For the first time in history, entire nations have encouraged many of their employees to work from home. Overnight, telecommuting has become mainstream. Even when the virus is considered to be largely under control, the chances are high that many individuals will continue working from home, at least part of the time. Even if you don’t have a personal need for a home office, it may be worth creating one, in terms of improving your home’s resale value.

 

Staging a Home Office

Until recently, home offices could be a way to creatively “stage” a small bedroom or extra room. Now, a dedicated home office is often a must-have feature. Many agents conducting a home tour will point out that a room could be used as an office, even if it is currently used or staged as a bedroom.

 

Home offices don’t just appeal to those who work from home full time. As technology continues to make us more mobile, young buyers have more options than ever to work from home periodically, depending on their job. Having a dedicated space is important to them, because it helps keep them focused and able to concentrate on work while they are at home on a Zoom call, planning a presentation, setting up their workday or simply paying bills. It can also be claimed as a tax deduction, if all the conditions are met.

 

In order to create such a space it’s important to take into consideration not only having a designated room, but also, the interior design of the room and the other features of an office that have a significant impact on people.

 

Features To Include in a Home Office

If possible, a home office should be situated so that the user has an attractive exterior view. You may need to improve the general lighting and add task-specific lighting at the desk. Or if there’s too much light, installing window coverings so that early morning or late afternoon sunlight doesn’t create difficulties viewing a computer screen or participating in video conferences may be necessary.

 

Some Basic Essentials:

  • Sufficient power outlets of 110W plugs and USB connections
  • High-speed, broadband internet, with a consistent connection
  • Extra cooling for electronics
  • A land line for phone and fax service, or only as a backup to mobile or VOIP technology
  • Adequate storage space/room for desk, file cabinet, printer, computer, etc.

 

The best home offices make a clear distinction between “work” and “home.” The location in the house should help prevent family interruptions during the day, for example, consider the distance from the children’s playroom. Some buyers will also be looking for a quiet neighborhood. Creating a dedicated home office space can make home life more enjoyable—and may improve the bottom line when you are ready to sell.

 

Requirements for Claiming a Home Office Tax Deduction

Some buyers will want to ensure that they can claim their home office as a tax deduction. According to the IRS, “The term ‘home’ for purposes of this deduction includes a house, apartment, condominium, mobile home, boat or similar property. It also includes a structure on the property like an unattached garage, studio or barn.

 

There are two basic requirements for the taxpayer’s home to qualify as a deduction:

  1. There must be exclusive use of a portion of the home for conducting business on a regular basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business.
  2. The home must be the taxpayer’s principal place of business. A taxpayer can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. Therefore, someone who conducts business outside of their home but also uses their home to conduct business may still qualify for a home office deduction.

 

Whether you are remodeling, selling or buying a home, consider the value-add and additional functionality included in a home office. See your Citywide Home Loans agent for additional details about how to make one a part of your dream home.

 

Sources:

https://www.homebuying.realtor/content/perfect-time-create-home-office

https://www.irs.gov/newsroom/heres-what-taxpayers-need-to-know-about-the-home-office-deduction

https://www.thebalancesmb.com/irs-home-office-rules-3542745